The four types of zones.
- Rally-Base-Rally (RBR): A demand zone created during a continuous uptrend.
- Drop-Base-Drop (DBD): A supply zone created during a continuous downtrend.
- Rally-Base-Drop (RBD): A supply zone marking a potential market reversal.
- Drop-Base-Rally (DBR): A demand zone marking a potential market reversal.
Fresh vs. Tested zones.
Every time price returns to a zone, it 'tests' the remaining orders. A 'fresh' zone has the most unfilled orders and the highest probability of a bounce. Each subsequent touch weakens the zone as orders are filled.
For prop firm traders, focusing only on fresh zones helps maintain a higher win rate, which is critical for staying above the daily loss floor.
How to draw zones accurately.
Identify the 'base'—the small candles that occurred right before the price exploded. Draw your zone from the highest wick to the lowest body (or vice versa). Consistency in how you draw zones is more important than the specific method.
If a zone is too wide, it makes your stop-loss too large, reducing your potential reward. Look for 'refined' zones on lower timeframes to keep risk tight.
Trading zones with prop firm discipline.
Supply and demand setups often take time to develop. Since MixFunded has no time limit on evaluations, you can afford to wait days for price to return to a high-quality zone.
Set your entry at the edge of the zone and your stop-loss just outside the other side. Size the trade so that even if the zone fails, you only lose 0.5%–1% of your account equity.